Does your business qualify as a provider of payment services under the (Money Laundering) and Terrorist Financing Act (PCMLTFA)?

On April 5th, 2022, amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its regulations were registered and implemented adding new categories of money services business (MSB) activities that were previously not considered to be covered.  The definition of electronic fund transfer (EFT) was also revised during the course of these amendments.

On April 27th, 2022, the Financial Transactions and Reporting Analysis Centre of Canada (FINTRAC) also retracted its policy position concerning these same activities.

In their policy interpretation #7670, FINTRAC previously took the position that persons or entities that were engaged in remitting or transmitting funds by any means solely for the purpose of utility payments, payroll or commission services, mortgage or rent payments or certain tuition payments were not considered to be MSBs because the transfer of funds was corollary to the actual service being provided.

In the same policy interpretation, FINTRAC also previously took the position that those who were engaged in providing settlement directly to merchants on behalf of the merchant’s customers, for the purchase of goods and services were also not considered MSBs.  Again, the reason was that the transfer was corollary to the service being provided.

The amendments to the PCMLTFA and its regulations added crowdfunding and payment services as activities now captured as MSB activities.  Additionally, the definition of EFT was changed to remove the exemption of “carrying out transactions by means of a credit/debit card for the payment of goods and services”.  This means that persons or entities that provide these services, which are now all considered “payment services”, must now comply with the PCMLTFA and its regulations.

In a 4-week series of articles, Marcelle Dadoun from the AML Shop will explore these changes in detail and provide some insight as to what this really means to persons or entities that provide payment services.

This week’s article addresses the question of what types of services qualifies as payment services under the PCMLTFA.

The AML Shop Announce New Principals - Marie Noel, Marcelle Dadoun and Adam Feldman

FOR IMMEDIATE RELEASE 

Toronto, Canada (November 15, 2022) – Today Matt McGuire and Monika Cywinska, founders of The AML Shop, have announced that the acclaimed anti-money laundering (AML) consulting firm’s advisors Marie Noel, Marcelle Dadoun and Adam Feldman are joining the organization as Principals and owners, as they continue to contribute to the growth and success of The AML Shop in their respective areas of expertise.

This exciting organizational change comes at the helm of the expansion and success of The AML Shop’s evolution in the AML, counter-terrorist financing, sanctions compliance, and risk management space. Since The AML Shop’s inception in 2016, the firm has served hundreds of clients across Canada and abroad, and expanded its team to over 40 AML experts, rapidly becoming Canada's leading business solution for AML compliance matters.

Bringing in its key employees as part of its new broader management structure, The AML Shop is strengthening its commitment to client service excellence, continuity, and subject matter specialization.  With its new Principals, it is positioned for its next stage of growth.

 ABOUT THE NEW PRINCIPALS

Marie Noel has over 20 years collective experience with financial institutions, insurance companies, and money services businesses, and will join as Principal, Outsourced Services and Investigations. Bringing her breadth of experience to managing The AML Shop’s outsourced services, Marie ensures clients are not only meeting their compliance obligations, but that they have the knowledge and training to understand and respond to compliance risks. Her background in managing investigations and high-risk accounts and businesses is invaluable to clients looking to make informed business decisions. She also works with clients and regulators alike on the development and implementation of remediation plans.

 Marcelle Dadoun leads The AML Shop's compliance program design division and provides advisory support to all reporting types, including new and evolving money services businesses, payment service providers and fintech clients looking to navigate local and international regimes for registration, licensing, banking access, and regulations. She will be joining as Principal, Program Design and Advisory. With over 20 years of compliance experience, Marcelle came to The AML Shop after serving in senior level roles with international banks and has since become a thought leader for emerging and newly regulated industries, such as crypto currency, payment services providers and prepaid card powered neo-banks.  She specializes in the development and maintenance of policies, procedures, risk assessments and training programs. Marcelle serves on several government and industry advisory groups and is a Certified Anti-Money Laundering Specialist and has additionally obtained a certification in risk management from the Association of Certified Anti-Money Laundering Specialists, as well as the Chainalysis Inc. Cryptocurrency Fundamental Certificate.

 Adam Feldman leads The AML Shop's risk management and technology divisions and will be joining as Principal, Risk Management and Technology.  As a former process engineer, Adam has a passion and talent for understanding, quantifying, and implementing efficient mitigation systems and processes across multiple industries and jurisdictions. Adam helps The AML Shop’s clients right size and optimize their compliance systems, processes and staffing, leveraging a toolbox of technology solutions. Those engagements are often designed as a response to regulatory examination findings or companies experiencing significant growth or change.  Adam is recognized as a specialist in the real estate and professional services sector. He is a Certified Anti-Money Laundering Specialist and has additionally obtained a certification in risk management from the Association of Certified Anti-Money Laundering Specialists.

“We are thrilled to announce the appointment of Marie, Marcelle and Adam as Principals at The AML Shop, each of whom are proven leaders in their respective areas of expertise and incredibly talented individuals that live the values The AML Shop is so proud of, helping us build a centre for AML excellence” says Monika Cywinska, Managing Director of The AML Shop. 

“This progressive change to our organization is a vital step forward to drive continued growth and help super-serve our clients with enhanced bench-strength and increased specialization and continuity of services. We are truly honoured to have them join as Principals and play a larger role in the growth and success of The AML Shop.”

Bank of Canada Supervisory Framework for Retail Payments Activities Act

This week, the Bank of Canada published their Supervisory Framework related to the Retail Payments Activities Act (RPAA).

There are several important changes for Payment Service Providers that will be regulated under the RPAA. The AML Shop is here to help your business maintain compliance and navigate the three pillars of the Bank of Canada's latest framework: Registration, Risk Monitoring and Enforcement.

Whether you are a MSB that needs to register as a Payment Service Provider under the RPAA or an existing Payment Service Provider, The AML Shop is your partner in RPAA compliance. Contact one of our AML Advisors today for more information and to get started.

Virtual, real or hybrid? – AML training post pandemic - An article featuring Matt McGuire

The AML Shop’s Matt McGuire (Practice Leader) was recently interviewed for the Money Laundering Bulletin to discuss what AML/CFT training looks like post pandemic.

Matt discusses the benefits of keeping training programs ‘real’ in whichever medium they are created in, acknowledging and reacting to a growing thirst for more short burst (15-minute) virtual training segments that focus on in-person live virtual content as opposed to slide deck presentations.

The AML Shop's Yong Li featured in Money Laundering Bulletin - Essential ingredients - data for compliance.

The AML Shop’s Yong Li (AML Advisor) has been called upon again by the Money Laundering Bulletin to lend his expert insights on AML/CFT Technology in the feature “Essential ingredients - data for compliance”. 

This feature discusses how making a decision based on incorrect data, while possibly rational, will not be sufficient for an AML examiner.  Yong highlights that the preparation of accurate data inputs in conjunction with AI assisted AML systems, is the key to accurate results. 

Ultimately, a mix of machine intelligence and human intelligence is ideal.

Read the full article by clicking the button below.

The AML Shop's Matt McGuire featured on CBC.CA

Matt McGuire is featured today in the CBC.ca article “Quebec casinos, gaming halls still vulnerable to money laundering by organized crime, experts say”. This journalistic analysis centres in on Quebec Casino’s and Gambling Halls and the associated vulnerability to money laundering and organized crime.

Additionally, this insightful article containing expert commentary from Matt McGuire and other experts discusses how Loto-Quebec is implementing controls to keep money-launderer’s from funnelling illicit funds through the gaming system.

Read the full article with Matt’s contribution, via the button below.

VIRTUAL EVENT - Most PSPs are now considered MSBs. Have you registered with FINTRAC yet?

THIS IS A FREE EVENT!

On April 27, 2022, new regulations were introduced by the Department of Finance enacting requirements specifically targeted towards Payment Services Providers (PSPs) and crowdfunding platforms. FINTRAC has recently sent a follow-up notice on July 21, 2022, related to the fact that there is an expectation that ALL PSPs, with very few exceptions, register with FINTRAC. The notice can be found here: link

The intent of FINTRAC’s notice is to most likely capture entities that would be covered under the changes coming as part of the new Retail Payments Activity Act. With the rescinding of PI-7760 by FINTRAC, most entities providing third-party payments services must immediately register with FINTRAC.

In this session, industry experts including The AML Shop’s Marcelle Dadoun (AML Advisor) have been brought together to provide information:

  • Where did this come from and why now?

  • What does it mean to PSPs and the associated definition?

  • Consequences of not registering.

  • Scope of responsibility

  • Suggested Steps to take

  • What does it mean to MSB/FMSB who are servicing PSPs or being serviced by PSP?


Following the presentation, there will be a short Q&A/Panel to answer any questions you may have!

Join us on Aug 25/22 from 1-3 pm!

Presenters:

  • Marc Lemieux - Lead counsel at Lemieux Business Law

  • Amber Scott - Founder & CEO - Outlier Solutions Inc.

  • Peter Morcos - Founder & Practice Leader - Reliance Compliance Solutions Inc. (RCS)

  • Duane Tough - Founder - Tough Money Group Ltd.

  • Susan Han - Partner - WeirFoulds LLP

  • Joseph Iuso - Executive Director - CMSBA

  • Marcelle Dadoun - AML advisor- The AML shop

FINTRAC - Crowdfunding Platforms and certain PSP's must register with FINTRAC

IT’S OFFICIAL – FINTRAC announced last week that all payment service providers are required to be registered as MSBs if they are providing:

 

  1. invoice payment services when they act as an intermediary between a payer and a payee to make payments to invoices, such as those pertaining to utilities, payroll and commission, mortgage and rent, or tuition

  2. payment services for goods or services when:

    1. they receive payment instructions and act as an intermediary between a payer purchasing goods or services and a payee supplying goods or services;

    2. the payer consents to make the payment for the goods or services through them; and

    3. the payee has an agreement with them to have access to the transfers carried out as payment for the goods or services.

  3. crowdfunding platforms that provide services to raise funds or virtual currency.

 

If you are not clear whether you fall into these categories or if you need help with registration or compliance program documents, The AML Shop is here to help.  Contact us today via the button below.

Money Laundering and The Real Estate Sector - Points to Ponder by Abhishek Desai

The Real Estate sector contributes more than 10% of the GDP in Canada – estimated to be worth 225 billion in 2022.

A report produced by the Criminal Intelligence Service Canada (CISC), a national intelligence agency of the RCMP, focused on the scope and extent of money laundering in Canada. The agency found real estate was used extensively as a tool for criminal activity. According to the report, the proceeds of crime are used to buy the property through various schemes.

The AML Shop’s Abhishek Desai is here to give his expert insights on this important topic. Read the article by clicking the button below.

EFT Travel Rule Threshold - FINTRAC Policy Interpretation

There has been some uncertainty regarding when the travel rule obligations apply to international electronic fund transfers (“EFT”) or SWIFT MT-103 messages (or equivalent) (“Prescribed EFT Transactions”).  Specifically, the question being asked is “At what threshold does the travel rule obligation apply to Prescribed EFT Transactions?”

Marcelle Dadoun (AML Advisor at The AML Shop) is here to breakdown this topic in a thorough FINTRAC Policy Interpretation on the EFT Travel Rule Threshold.

Click the button below to read the full article.

OSC holds global crypto asset trading platforms accountable - Announcement

FOR IMMEDIATE RELEASE
June 22, 2022

TORONTO - The Ontario Securities Commission (OSC) announced today the outcome of two successful enforcement actions against non-compliant crypto asset trading platforms.

A panel of the Capital Markets Tribunal today approved a settlement agreement between the OSC and Bybit Fintech Limited (Bybit), incorporated in the British Virgin Islands, for failing to comply with Ontario securities law.

In a separate decision, a panel of the Capital Markets Tribunal ordered substantial monetary sanctions and a permanent market participation ban against Mek Global Limited, incorporated in the Republic of Seychelles, and PhoenixFin Pte. Ltd., incorporated in Singapore (collectively, KuCoin) for failing to comply with Ontario securities law.

Bybit and KuCoin both operate unregistered crypto asset trading platforms and allowed Ontario investors to trade securities without a prospectus or any exemption from the prospectus requirements.

“Foreign crypto asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action,” said Jeff Kehoe, Director of Enforcement at the OSC. “The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”

The OSC successfully obtained orders permanently banning KuCoin from participating in Ontario’s capital markets and requiring KuCoin to pay an administrative penalty of CAD $2,000,000 and a further $96,550.35 towards the costs of the OSC’s investigation.

Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided requested information, and committed to engaging in registration discussions. As part of a settlement agreement, Bybit has disgorged USD $2,468,910 and paid a further CAD $10,000 towards the cost of the OSC’s investigation. Bybit has also given an undertaking to the OSC, which holds the firm accountable for taking steps to bring its operations into compliance. This undertaking represents a legally enforceable commitment by Bybit to the OSC.

In addition, while registration discussions are ongoing, Bybit confirms that it will not accept new accounts for Ontario residents, offer any new products to existing accounts held by Ontario investors, or engage in any marketing and promotional activities targeted at Ontario residents. If registration discussions fail, Bybit confirms that it will wind up its Ontario operations.

For existing Ontario retail investors, Bybit confirms that it will require investors to wind down their positions in certain restricted products, such as contracts that involve leverage, margin, or the extension of credit. Any funds or assets remaining in Ontario retail investor accounts may be used for non-restricted products or withdrawn from the Bybit platform.

On March 29, 2021, the OSC warned crypto asset trading platforms that offer trading in derivatives or securities in Ontario that they must contact the OSC or face enforcement action. The warning included a deadline of April 19, 2021 for such platforms to start registration discussions. Despite this warning, Bybit and KuCoin did not contact the OSC by the deadline and continued operations in Ontario.

The OSC will continue to take action against non-compliant crypto asset trading platforms and are in contact with international securities regulators to exchange information to support enforcement action.

The OSC thanks the British Virgin Islands Financial Services Commission for their assistance in the Bybit matter, and the Seychelles Financial Services Authority for their assistance in the KuCoin matter.

All crypto asset trading platforms registered in Ontario are listed on the Registered Crypto Asset Trading Platforms page on the OSC’s website.

Investors are encouraged to check the registration of any person or business trying to sell investments or offer investment advice. This can be done by visiting the Check Before You Invest or the Registered Crypto Asset Trading Platforms pages on the OSC website. Investors can also sign up for email notifications when new warnings and alerts are issued and can follow the OSC’s Twitter feed at @OSC_News.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.ca.

 

Press release via the Ontario Securities Commission.

Matt McGuire on Global Radio

Matt McGuire (Practice Leader at The AML Shop) was featured on The Mike Smyth Show (Global News) in advance of the Cullen Report release to discuss key issues in money-laundering in British Columbia. This powerful discussion touches on a variety of key AML topics including the impacts of money laundering on real-estate and the need for increased enforcement of financial crimes.

Securities, NFTs and the Changing Regulatory Landscape - WATCH VIDEO

Matt McGuire (The AML Shop Practice Leader) recently participated in a panel discussion on Securities, NFTs and the Changing Regulatory Landscape at the 2022 Alberta Technology Symposium.

The NFT boom of early 2021 created momentum around blockchain tokens as a powerful way to commoditize assets like art and intellectual property. Still, the technology’s lightning fast evolution means that NFTs are caught in a regulatory grey area that needs clarity. Consumer and investor protection requires building legal solid and governance policies around token issuances to avoid replicating the disastrous ICO bubble of 2018. The Canadian Blockchain Consortium is joined by industry members and legal experts to shed light on some of the critical issues raised by NFTs and discuss a path forward on market regulation.

Moderator:
Richard Jones, Q.C. - Litigation and Municipal Groups | Brownlee LLP
Speakers:
Melissa Smith, Partner | Borden Ladner Gervais LLP (BLG)
Philip Long Senior Manager and Blockchain Lead | KPMG Canada
Krista Rabidoux, CPA, CMA, EA, Partner | Andersen
Matt McGuire FCPA, FCA, CFF, CAMS, AMLP, CCI, Co-Founder | the AML shop

Matt McGuire The AML Shop Practice Leader, featured in Epoch Times

The AML Shop Practice Leader Matt McGuire has been called upon to comment on the news of new financial resources allocated to FINTRAC under the 2022 Federal Budget in the Epoch Times Feature Budget’s Plans for Financial Crimes Agency Prompts Concerns Over Impact on Crowdfunding. 


This article highlights a variety of news-worthy AML topics including the impacts of the Emergencies Act and types of Money Laundering issues in Canada within the context of the latest Federal Budget announcement.